Proforma Invoice

Topics: Pro forma, Invoice, International trade Pages: 5 (1299 words) Published: October 8, 2012




Sr No| Chapter Name| Page No|
1.| Introduction: Meaning and Definition.| 3|
2.| Need for Pro Forma Invoice| 4|
3.| Pro Forma Invoice check list| 5|
4.| Steps in preparing Pro Forma Invoice| 6|
5.| Importance of Pro Forma Invoice in International business| 7| 6.| Sample Pro Forma Invoice| 8|
7.| Bibliography| 9|

An abridged or estimated invoice sent by a seller to a buyer in advance of a shipment or delivery of goods. It notes the kind and quantity of goods, their value, and other important information such as weight and transportation charges. Pro forma invoices are commonly used as preliminary invoices with a quotation, or for customs purposes in importation. They differ from a normal invoice in not being a demand or request for payment.

A proforma invoice is a quote in an invoice format that may be required by the buyer to apply for an import license, contract for pre-shipment inspection, open a letter of credit or arrange for transfer of hard currency. It may not be a required shipping document, but it can provide detailed information that buyers need in order to legally import the product.

Proforma invoices basically contain much of the same information as the formal quotation, and in many cases can be used in place of one. It should give the buyer as much information about the order as possible so arrangements can be made efficiently. The invoices inform the buyer and the appropriate import government authorities’ details of the future shipment; changes should not be made without the buyer’s consent.

As mentioned for the quotation, the points to be included in the proforma are:

1. Seller’s name and address
2. Buyer’s name and address
3. Buyer’s reference
4. Items quoted
5. Prices of items: per unit and extended totals
6. Weights and dimensions of quoted products
7. Discounts, if applicable
8. Terms of sale or Inco term used (include delivery point) 9. Terms of payment
10. Estimated shipping date
11. Validity date


Pro forma invoices are used by various businesses in almost all industries. A pro forma invoice can be referred as an introductory bill of sale sent to buyers in advance of a shipment or delivery of goods. Generally, it provides a description of the items purchased, notes the cost, as well as other important info like shipping weight and transport charges. The pro forma invoice is usually used for customs purposes on imports.

A pro forma invoice is used for offering a preliminary product price quotation, before the actual sale of that specific product. Besides, it might also be used to provide the potential buyer with additional details about the product. However, there are a few more reasons that a seller or buyer might need to use a pro forma invoice. Some important ones are mentioned below:

Export and import:
Complex trade transactions might involve the trade parties to use a pro forma invoice for clarifications. For example, if one country purchases goods from another country, there might be currency and exchange rate issues. These issues would be clearly explained by using a pro forma invoice.

Custom duty calculations:
Pro forma invoices might also be useful in computing the projected cost for customs duties when the goods are crossing borders. It is always better to avoid surprises in trade exchanges. The pro forma invoice aims at addressing all factors that might be caught up in specific trade obligations.

Clarification and contact details:
Pro forma invoice is suggested as a source of contact between the buyer and the seller. It must be aptly recognized for what it is with a clear label about the pro forma on the top of the invoice. It is a significant source of info, such as the info about the buyer and the seller. Through the use of a particular date on pro...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Proforma Invoice Price Essay
  • Invoice and Auditor Essay
  • Invoice and Source Documents Essay
  • Audit: Invoice and Balance Sheet Date Essay
  • Invoice and Billing Essay
  • Tax Invoice and Record Keeping Essentials Essay
  • Invoice and Revenue Cycle Essay
  • Adopt a Standard Invoice Numbering Convention Essay

Become a StudyMode Member

Sign Up - It's Free